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Saturday, Feb 22, 2025

UK banking 'resilient' and inflation fight remains top focus, says Bank of England Governor Andrew Bailey

UK banking 'resilient' and inflation fight remains top focus, says Bank of England Governor Andrew Bailey

The Governor of the Bank of England, Andrew Bailey, has said the UK banking system is in a sound position and well placed to support the economy despite some global jitters.
The UK banking system is "resilient" and the main focus for the Bank of England remains tackling high inflation, its governor has said.

Andrew Bailey's comments came as he told an audience at the London School of Economics this evening that he was not unduly worried by recent global jitters, which come following the high-profile tumultuous takeovers of Silicon Valley Bank and Credit Suisse.

The concerns contributed to a volatile day of trading Europe-wide on Friday which saw Deutsche Bank's shares fall more than 14% at one point, although it and many other banks saw limited recoveries on Monday as markets calmed.

Mr Bailey said that despite "big strains in parts of the global banking system" he remained confident UK banks were "resilient, with robust capital and liquidity positions, and well placed to support the economy."

He told his audience: "Recently, the evidence has pointed to more resilient activity in the economy, and likewise employment; signs that nominal wage growth has been rather weaker than expected; and two months in which there was first some downside news on inflation relative to our expectation and then a bit more upside news.

"This reminds us that the path of inflation will not be entirely smooth and cost and price pressures remain elevated."

Mr Bailey added: "We have a strong macroprudential policy regime in this country. With the Financial Policy Committee on the case of securing financial stability, the Monetary Policy Committee can focus on its own important job of returning inflation to target."

It comes after inflation made a surprise leap to 10.4% last week, with the Bank of England then raising the interest rate for an eleventh successive time to 4.25%.

Following the announcement, Mr Bailey said he was feeling "a bit more optimistic" and expected inflation to fall sharply in the summer.

Despite the recent high-profile banking failures, the European Central Bank, US Federal Reserve and Swiss National Bank have also all raised interest rates this month.
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